Res Judicata: Defending Romneycare

The Massachusetts health care law signed in 2006 by Governor Romney has three main parts:

1. It requires all citizens to buy a state-approved health insurance plan,

2. It provides subsidies to certain low-income people to pay for insurance,

3. It requires employers to provide health insurance to their employees or pay a fee to the state.

I agree with parts 1 and 2. Health care is of course, a complex subject. But the crux of our problem is that individuals are not taking care of themselves. For decades the tax code has encouraged employers to provide a very expensive benefit to employees, health insurance.

This began during a period of wage controls during World War II. So the idea of providing health insurance was an unintended consequence of bad economic policy. The longer it has become customary for employers to provide coverage to employees the less Americans must be self-reliant and thrifty.

It’s time to decouple health insurance from employment. John McCain proposed such a reform plan in his presidential campaign. It was his best idea. It would have taxed health benefits to the employees and offered them tax savings if they purchased their own private insurance plans. This came in for attack by Obama as a tax increase, and in truth it is–if the employee will not take responsibility for his or her own health care.

Conservatives should embrace self-reliance. And any state that mandates individuals to buy their own health insurance is moving in the right direction. The challenge to Obamacare is that there is no constitutional authority to mandate individuals to purchase health insurance at the federal level. This is true. The Constitution does not enumerate such a power to Congress; therefore the Tenth Amendment reserves it to the states. Governor Romney wisely took that approach in 2006. People are not entitled to health care or health insurance coverage under American law. They have to pay for it. And if a lot of Americans would rather shift the cost of their health care onto society by deferring insurance until they get sick, then they need to be forced by their states to get off the dole.

Part Two of the Romney bill, subsidizing people up to 300% of the federal poverty level who are not already on some type of coverage is probably necessary. Good health insurance is expensive, and even minimal coverage with a high deductible is costly to the working poor. So a state subsidy paid through a state agency created to purchase coverage for such people in bulk, is better than leaving them uncovered. Of course, the subsidies should end if a low-paid worker’s income rises. It’s true that subsidies are a disincentive to savings and work. But subsidizing the purchase of minimal insurance coverage is less expensive than the alternative: paying much higher costs for such people later in life when they are really ill.

I don’t agree with Part Three of the Romney law, requiring employers to purchase health coverage for their employees for the reason I’ve stated here. Coverage should not be employer-based. It’s an individual responsibility of everyone to buy their own health insurance. But Governor Romney opposed this part of the law. It was included as an overall compromise, which in large part, is beneficial. His decision to accept the employer mandate and sign the bill into law was an acknowledgement that he had obtained the best bill he could from an overwhelmingly Democratic legislature that opposed Part 1, the individual mandate.

Romney could take the position that health care is mostly a state problem. If every state enacted an individual insurance mandate then we would begin to break the terrible fiscal link between health insurance and employment. We have Medicare for senior citizens (even though most of them can and should be required to buy their own health insurance) and Medicaid for the poor, but for everyone else, we need to make people be self-reliant.

This should come from the states and not Congress, which has no such power. Romney has been so pummeled by conservatives for the Massachusetts law that he has not been able to articulate a vision for health care. He will need to do so. And maybe conservatives could actually look at the details of Massachusetts law and realize much of it is to be commended.

17 Comments so far ↓

But the crux of our problem is that individuals are not taking care of themselves.

No, the crux of our problem is that the insurance regime is constitutionally incapable of controlling the cost of healthcare. This is systemic and inherent, as the insurance regime has no financial interest in controlling costs — on the contrary, its financial interest is in seeing costs go higher and higher. The cost of healthcare has exploded relative to GDP, real wages, inflation, you name it, even in the past 10 years. Are you seriously suggesting that this is because people suddenly decided they didn’t want to take care of themselves? What does the face-value cost of healthcare have to do with individual citizens deciding or not deciding to “take care of themselves”? This is a patently absurd argument. I’m not saying individual responsibility is unimportant, or that there shouldn’t be limits to the care provided, but the above is an absurd allegation that has zero relevance to the cost of healthcare. It makes me wonder if Mr. Howard “is a lawyer in Chicago” Foster works for the insurance regime. It would certainly help explain his obsession with “tort reform.”

This article was written in 2009, and notes a 131% increase in the cost of health insurance premiums over the previous decade. There is every indication that the delta in the cost of health insurance has continued to grow since then.

Also, health care is a national industry. Health care supply chains, even and especially supply chains for individual hospitals and providers, cross state lines. The power to regulate healthcare falls well within the Federal government’s Constitutional authority to regulate interstate commerce (which is impossible without a healthy workforce in any case).

So much drivel, so little time. So modern health care is about frugality and self-reliance? Shopping around to get a second and third bid on your brain cancer surgery? Please.

Yet there is one point well taken here: health insurance should be de-coupled from employment. Employer-funded health insurance is a huge drag on business, no question about it. So let’s get rid of it.

Most other Western economies uses a system that treats the entire population as the risk pool, for one obvious reason: it is cheaper.

The trouble with health care costs arises with catastrophic and/or chronic illness.
Under both scenarios a competitive, profit-driven industry will seek to avoid the full cost of necessary treatment by employing strategies that are familiar to us all: selective acceptance policies, rescission, capping benefits, denial of care, and denial of insurance coverage for anyone with a pre-existing condition. A private, profit-driven health insurance industry is required to do this, due to their fiduciary responsibility to shareholders. They are behaving rationally and appropriately. Yet the behavior is counterproductive in the extreme.

This leads to the ills we know from the current system: high and ever-escalating premiums, bankruptcies due to capping out in the case of very expensive or lengthy treatment, and 50 million uninsured.

The United States needs a base system that is run by the government. That’s right, the government. This system will provide health care to all. That way all will have the key ingredient to better health and life expectancy: access to a doctor. Anyone who wants to opt out can be free to do so, and purchase private insurance. They could even get a tax deduction for it.

But the base system must treat health care as a cost center, and the entire population as the risk pool. It must also be empowered to negotiate with health care providers to keep costs low.

Any other suggestion has been disproven by the empirical data that have accumulated since this grand experiment began about 40 years ago. Life expectancy and child mortality on a par with Slovenia? Is that the best we can do?

@SFTor: Well said. You make an excellent observation in noting that certain highly (socially) counterproductive behaviors from health insurance companies are “rational and appropriate” (in the market sense).

If there is no constitutional authority to mandate individuals to purchase health insurance at the federal level … is there any constitutional authority to mandate individuals contribute money to a private retirement investment fund?

I can see where someone could favor the healthcare mandate and oppose any Social Security privatization (or conversely, favor SS privatization and oppose the mandate) on a policy basis.

I cannot see how anyone could honestly claim to oppose the healthcare mandate at a federal level on a Constitutional basis … and yet favor a mandate that requires individuals to contribute money to a federally managed private retirement fund, rather than to pay taxes to support a social insurance program which provides for general welfare.

Our corporations are in competition with businesses in the industrialized world who don’t have to supply health care because they have universal government health care. That’s a big expense companies like Siemens, Airbus, Daimler-Benz or Storz-Bickel don’t have to worry about that ours do. Personally I like the Canadian plan better than the UK though the Swiss voucher might be a better fit for America as it wouldn’t legislate the entire health care insurance industry away overnight.

SFTor1 nailed it. And what of guaranteed issue? Is it ok for insurance companies to cherry pick individuals, which would happen in the invidual market, for all the faults of employer based plans, at least there is guaranteed issue via risk pool sharing.

Weird. I posted and it disappeared. Maybe I got blacklisted? I post a period then edit.

I agree re not having the employer pay. All that does is isolate the consumer from informed choice. The main reason for having employer as payor is that a larger pool involved, so there are lesser costs. But that doesn’t apply with the new Act (I believe), so there is no reason for employees not to shop around for the best coverage. If not, there better be a pool for the rest of us, as SFTor1 points out.

Being self employed, I have to have a high deductible in order to keep costs in line. This is not that bad, since the premium for two of us is around $8k, and we get prescriptions out of that. So far, we haven’t come close the $5k deductible. We figure we save annually what we don’t use compared to a more coverage. Assuming a much larger pool than us two, I anticipate similar coverage with less premium. This is much less than the $24k cadillac plans I see bandied about, that the employee doesn’t realize he is wasting since it comes off the top of his pay. I think many would much prefer more in the pocket for a little more risk if they had a chance to shop around. I agree McCain was dead right on that, and it could have been included in the ACA if the POGers hadn’t been such obstructionists.

If everybody had to go out tomorrow and buy individual health insurance, what percentage would be uninsurable? And how do those people get healthcare in a cost-effective way? That was, IMO, the big shortcoming of McCain’s plan. I have yet to see any Republican come out with a proposal that doesn’t screw people with chronic conditions. (If anyone has heard of one that addresses the problem, do tell).

I totally agree. I was just pointing out that informed decisions on coverage are far more likely if you pay for it directly rather than having it taken off the top. We are fortunate to be healthy when we got our policy, and still are, thankfully. For those unfortunate, this is no solution. However, I thought ACA would cover preexisting conditions for those of us out our own. Can someone elaborate on this?

Yes, ACA does make the pre-existing condition issue go away. But that provision doesn’t kick in until 2014, and is at the center of the mandate issue. You can’t get everybody insured if nobody will sell them insurance. But (according to the insurance companies, anyway) you can’t require that insurance be offered to everyone without underwriting unless there is a mandate, because the adverse selection problem will cause a death spiral. But if people with chronic conditions aren’t able to buy insurance, their unreimbursed costs will be shifted back onto the people who do have insurance, which will make the insurance companies tighten their underwriting standards, which will mean fewer insured people and more cost shifting. So there’s two kinds of death spirals.

That’s why I support ACA, in spite of its considerable flaws (lots of give-aways to insurance, pharma, and everyone else with a stake in the present system, and no deregulation of the supply side of the equation). But it’s by no means a given that the solution to the pre-existing conditions issue will ever happen. My state’s government, among others, is fighting to make sure that pre-existing conditions can stay uncovered.

A bunch of us have had. I deleted some choice words for a twitcher thinking that I was on some watch list under the TOS. Bidthesoldier and I came up with the same solution. Write, copy, post a period (.), then edit the period and paste what you wrote.

I think the idea of being required to buy healthcare and being required to buy retirement seems similar. Can someone not work, though, and still be required to pay into SS? Can someone not work, and be exempt from buying healthcare?

The crux of my question is whether citizenship requires that you buy something, especially if the product is chosen/designed/priced by the government. We may already be doing that in a number of areas. I just don’t know yet.

Social Security has plusses and minuses in my opinion but I’ll try to stick with healthcare.

I do like decoupling from employment. If I lose a job, my healthcare should be portable to a new job such that I’m not now someone with a pre-existing condition. I realize I may get some new sickness while unemployed but it should be handled the same way.

What’s the thoughts from this group on the oft bantered ideas of tort reform, fewer mandated things needing covered, and being able to buy across state lines?

I’ve been all over the place I grant but would it be better instead of requiring buying insurance, that you get a credit/deduction for getting it? Would that still face the same constitutional issues?

What’s the thoughts from this group on the oft bantered ideas of tort reform, fewer mandated things needing covered, and being able to buy across state lines?

I’m not sure how much good tort reform would really do … it’s efficacy in bringing down healthcare costs has clearly been oversold. And of course, one man’s “excessive costly diagnostic testing” is another man’s “doing what it takes to diagnose a potentially fatal condition”.

Of course, a lot of the cost of diagnostic testing could be reduced by spending less on some F-35s or other costly military hardware, and using the money to fund deployment of more high end imaging and diagnostic technology around the country. so that diagnostic clinics didn’t have to charge nearly as much for cost recovery on their testing.

Fewer mandated things being covered? I do think this needs to be part of any insurance discussion. I agree that society can’t pay for everything for everyone … and there are tradeoffs and limits.

Cross-state portability? That all depends on how strong a federal bureaucracy you want in place to regulate the insurance industry, doesn’t it? If you want to gut the federal government … then it’s probably a bad idea.

But by and large, I would have welcomed the GOP participating in the ACA discussions WITH some sort of provisions that had some or all of those ideas been incorporated, the GOP would have supported the final package. It would have made it a stronger bill. Alas … lost opportunities.

’ve been all over the place I grant but would it be better instead of requiring buying insurance, that you get a credit/deduction for getting it? Would that still face the same constitutional issues?

A lot of us wish that the legislation had included a mandatory tax for all, with credits to those who have their own insurance. That would have gone a long way towards addressing constitutional issues.

The problem with buying insurance across state lines is that, while it sounds good in theory, it will inevitably lead to a race to the bottom. Just as all credit cards are now issued from Delaware or South Dakota, all health insurance would be based on “jurisdiction shopping” on the part of the insurers.

The problem with a tax credit for buying insurance is that it only works if there is somebody you can buy it from. I’m one of those people to whom nobody would ever willingly sell health insurance (I’ve had Type 1 diabetes since age 16). So would you rather I had insurance or would you prefer the cost be shifted back to you if I should have medical expenses that I can’t afford?